Skills policy updates - June 2026

Welcome to the Enginuity policy update for June 2026, brought to you by The Policy Centre for Supply Chain and SMEs.

What's in this update?

Each month, this update brings you the latest on skills policy, the headlines from Enginuity’s policy activity, and what to watch out for the month ahead. This month’s update focuses on the policy changes, funding opportunities and government activity most likely to affect engineering and manufacturing SMEs - including changes to apprenticeship funding, new youth employment support, devolved skills reforms, and major investments in AI and workforce transformation.

UK policy updates

Policy changes to watch

Keir Starmer announced his resignation from his roles as Prime Minister and Leader of the Labour Party. The new MP for Makerfield, Andy Burnham, is likely to be the next Prime Minister

Andy Burnham has a long-standing record as an advocate for technical education and devolution and introduced initiatives like the Greater Manchester Apprenticeships and Careers Service and the Greater Manchester Baccalaureate to align skills provision with employer needs. However, his record on adult education is more mixed, with limited progress despite increased devolved powers as Greater Manchester Mayor. Ultimately, delivery will depend on funding and resources, but we could expect to see a push for further devolution of skills and a raised profile for further education. See more here.

Andy Burnham set out his plan for government in a speech in Manchester

A key theme of his approach will be devolution, which includes devolved employment support. His speech emphasised that Westminster makes change difficult and that the UK’s over-centralised system has caused fragmentation. Burnham has also pledged to use government contracts to create apprenticeships and work placements for young people and to end a university-first education system. He also promised a “rethink” of how young people are supported into work, saying he was taking “very seriously” Alan Milburn’s recent report on the rise of young people not in education, employment or training. See more here.

Skills Minister Jacqui Smith commissioned a review of apprenticeship funding bands

Funding bands determine the maximum amount that can be drawn down from the apprenticeship budget for training and assessment. They currently range from £1,500 to £27,000. Smith has asked Skills England to provide urgent advice on which apprenticeship standards lack sufficient funding, with a focus on the 20 most popular standards. See the details here and Enginuity’s comment here.

Government promised to deliver a “new deal for young people”

This includes plans to crack down on poor-quality university courses and shift investment further towards youth apprenticeships. The deal pledges to deliver a “renewed social contract with better opportunities” and a “major shift in skills funding towards apprenticeships”. See more here.

Government announced its long-awaited Defence Investment Plan

The plan has pledged a further £15 billion for Defence over the next 4 years. Investments include funding for autonomous weapons, a new hybrid part-AI-powered Royal Navy, new tech, and defence against AI threats. There are plans to create a new £50 billion Defence Export Facility to support British defence businesses. The plan aims to create 60,000 more jobs and to bring more SMEs into supply chains. Every pound “wherever possible” aims to be spent on British workers and businesses. See more here.

Insights from Government

Work and Pensions Select Committee questioned Pat McFadden

The Secretary of State and Permanent Secretary, Sir Peter Schofield, were questioned on the work of DWP. Schofield said the growth and skills levy will be used more strategically, with a stronger focus on young people and labour market gaps, with Skills England acting as the “bridge” between employers and training providers. McFadden confirmed that there is no formal target for NEET reduction. See more here.

Devolved administrations 

Wales

Welsh skills training to be reshaped

The Welsh Government has announced a package of reforms to vocational skills training, with an audit underway that will shape the agenda for a Future Skills Summit in Autumn 2026. The overall aim is to build a system that is responsive to economic priorities and more aligned to employer demand. See more here.

Scotland

Qualifications Scotland set out the latest progress on its programme to review and reform qualifications across Scotland

Qualifications Scotland has confirmed that all proposed changes to assessment in the current National Courses will be implemented from 2026-27. The next phase of survey work on National Course assessments is now underway. Beyond these improvements to current assessments, Qualifications Scotland is progressing a long-term programme of qualifications reform designed to ensure Scotland's qualifications fit the needs of a modern, changing country. See more here. 

Auditor Scotland published a report on post-school education and skills reform in Scotland

The report was highly critical of Scotland’s skills reform programme, assessing it as being held back by weak delivery planning, slow progress and limited resources. The review recommends a stronger, more structured approach that is undermined by clear delivery plans, adequate resourcing, defined outcomes, improved oversight, and more systematic engagement with industry and learners to ensure reforms can be effectively implemented. See more here.

New support for SMEs 

Funding opportunities 

The new £3k Youth Jobs Grant went live this month

A £3,000 Youth Jobs Grant is available for every person aged 18 to 24 you hire across Great Britain who has been looking for work for six months or more. This is the first available fund in a series of investments (totalling £2.5 billion) the government has pledged to make in the Youth Guarantee and Growth and Skills Levy over the next few years. See more here.

The £6 million Oil and Gas Transition Training Fund opened for applications

Scottish and UK Governments are contributing £3 million each for the 2026-27 round of the fund, which aims to enable over a thousand more oil and gas workers to benefit from funded training and careers advice in the sustainable energy, life sciences, advanced manufacturing and defence sectors. See more here.

DWP opened applications to potential delivery partners for the national rollout of the Jobs Guarantee

This five-week grant application window will run until July 13, with organisations specialising in employment, skills, youth services and wraparound support invited to bid. Ministers expect the scheme to support up to 90,000 young people. See more here.

Other support announcements 

Government announced over £200 million to help companies adopt AI

The new package will include: £100m to match British companies with British AI; £53 million for new initiatives to boost AI adoption and innovation; £4 million expansion to the Spärck AI Scholarships programme; £5m in each of the AI Growth Zones to support local businesses; new AI Advisory Growth abs; and Industry-led AI Adoption Plans. See more here.

Government announced the Early Careers Jobs Alliance, a new partnership with industry and trade unions

Backed by £20 million, the alliance will map how entry-level work is changing, produce practical help for businesses on how to redesign roles, and identify early examples of good practice. This will start in the Digital and Technologies sector, with plans to then roll out across all 8 Industrial Strategy sectors. See more here.

Have your say with government 

Respond to the inquiry on the relationship between the Government and the defence industry

A UK Parliamentary Select Committee has opened a call for evidence into the relationship between the Government and the defence industry, closing 21st July 2026. This inquiry aims to explore how defence procurement and regulatory processes need to change to enable smaller, more technology-focused companies to supply the needs of the UK defence industry. See more here.

Contribute to the Apprenticeships and Industrial Strategy consultation

Enginuity is preparing a response to the Apprenticeships APPG call for evidence on Apprenticeships and the Industrial Strategy, which closes 1 August. If you are keen to contribute to our submission, please get in touch.

Get involved through Enginuity

Alongside this, we continue to work regularly and closely with government departments to influence the design and delivery of skills policy to ensure it works for our sector and SMEs. We are always keen to hear from businesses who would be happy to support with roundtables, surveys or research – please email us at [email protected] if you’re interested in being involved.

What have we been doing this month?

This month, Enginuity has focused on strengthening the evidence base on SME pressures and skills gaps:  

We launched our SME Snapshot Survey, which you can contribute to today!

This survey is designed to determine how SMEs in our sectors are experiencing policy reforms and economic pressures. The survey will close on Wednesday 15 July, after three weeks of collection, after which we’ll start analysing the data. Please complete and share. See more here.

We published Mind the Gap, a new research report developed by SQW in partnership with Enginuity, quantifying the scale and cost of skills gaps across the UK’s engineering and manufacturing sector

Our results reveal that skills-related challenges cost the manufacturing and engineering sectors approximately £5.2 billion per year, equivalent to around 2% of annual output and costing affected companies as much as £110k, with significant implications for SME productivity, supply chain resilience and economic growth. Download the report here, and the webinar recording here.

We also continued to advocate for SMEs across the sector:

• We continue to work closely with the Department for Business and Trade as they develop their Advanced Manufacturing Jobs Plan, advocating for flexibilities in existing policy structures which could make a big difference for SMEs in the sector.
• We met with officials across HM Treasury, DESNZ and Skills England to explore how skills incentives are working for engineering and manufacturing SMEs, where they are falling short, and what practical solutions could improve impact.
• We are also supporting key government departments with the development of more coherent models for SME engagement to ensure policy reflects the realities facing firms across the sector.
• We met with Ian Sollom MP to discuss the Liberal Democrat Skills Policy and areas for collaboration.

What's coming up in July?

With Parliament entering recess at the end of the month, July is expected to be quieter on new policy announcements, with focus shifting to delivery and implementation. Of course, the change in leadership will take up a lot of airtime. 

• Parliament goes into recess for the Summer on 16 July and won’t return until 1 September.
• The Advanced Manufacturing Jobs Plan is due to be published ahead of the parliamentary recess in July.
• Development of V-level content is underway and will continue, alongside the design of further Apprenticeship Units and Foundation Apprenticeships.
• We’ll host our annual Skills Awards on 1 July at Park Plaza, Westminster Bridge. See more here.
• We’ll be celebrating Welding Week, with our CEO Ann Watson MBE speaking at WeldExpo2026 on 7 July in Cambridge – a flagship industry event bringing together employers, providers and apprentices to spotlight welding careers through hands-on demos, workshops and competitions. See more here.
• Preparations will commence for Vocational Celebration Day. We encourage you to engage with Enginuity ahead of this event to shape our activities and maximise impact. See more here.

Thank you for reading! This update was brought to you by The Policy Centre for Supply Chain and SMEs: Powered by Enginuity. If you have any feedback or suggestions for future editions, please get in touch. 

In addition, if there is a policy issue affecting your business or a skills challenge you think government needs to understand, we want to hear from you. Contact us at [email protected].